LegalandPublicPolicyConsiderationsoftheEUReferendum

Brexit Date 29 March 2019: Countdown for shipping goods from the UK and to the UK from Asia, Americas and Africa

Brexit is scheduled to become effective at the end of 29 March 2019 and will take place either with a Withdrawal Agreement or without one having been entered into between the UK and the EU-27. At this point in time it is possible that the Article 50 TEU notice is withdrawn by the UK Government. Whether the Brexit Date 29 March 2019 is postponed upon application of the UK and agreed with the unanimous consent of the other 27 Member States is still undecided.

Upon Brexit becoming effective the UK will cease to be party to the existing Free Trade Agreements and Association Agreements the EU currently has entered into with a multitude of countries and regional free trade zones around the world in the last decades. The UK is currently striving to enter into its own binding agreements with such other countries to come into force on 30 March 2019 but so far only continuity agreements with Switzerland and a number of smaller UK trading partners have been inked.

There is no difference between a “Deal” and a “No Deal” Scenario in relation to the termination of the existing Free Trade Agreement and Association Agreements on 29 March 2019. Even if the UK House of Commons should change its mind and ratify the Withdrawal Agreement, and even if the Transition Period until 31 December 2020 contemplated in the Withdrawal Agreement under Articles 126 and 127 thereof would then come into force, such Transition Period only applies in the relationship between the UK and the EU-27, but does not bind any other country around the world without their express consent.

Article 129 of the Withdrawal Agreement provides that the UK shall be bound by the obligations stemming from the international agreements concluded by the EU, but binds only the UK. In the context of Article 129 it is contemplated that the EU will notify the other parties to such international agreements that during the Transition Period the UK is to be treated as a Member State for the purposes of such agreements, but that is not binding on such other countries.

Shipping goods from the UK to destinations around the world can take several weeks and if such goods arrive after 29 March 2019 in countries with which the EU has Free Trade Agreements (for example Japan, South Korea, Canada, Mexico, Columbia, Ecuador, Peru, South Africa) then the import and customs regime will have changed and the import of such goods will be handled under a different set of rules. That applies both in a Deal as well as in a No Deal Scenario.

Shipping goods from Japan, South Korea, Canada, Mexico, Columbia, Ecuador, Peru, South Africa or other exporting countries to the UK can of course also take several weeks and if such goods arrive in the UK after 29 March 2019, then the import and customs regime will have changed and the import of such goods will be handled under a different set of rules. That applies, subject to any internal legislation in the UK, in the “No Deal Scenario”. In case of the “Deal Scenario” the UK will be obliged under Article 129 of the Withdrawal Agreement to apply those rules which currently exist under Free Trade Agreements and Association Agreement entered into in the past by the EU even if the relevant exporting other country does not apply them any longer after 29 March 2019 to goods shipped from the UK to such other country.

It is completely uncertain whether individual exporters exporting to the UK will have direct recourse under Article 129 of the Withdrawal Agreement against the UK or whether Article 129 is a simple international obligation owed by the UK to the EU only, without having direct effect in favour of exporters exporting to the UK.

About Squire Patton Boggs:

We are a Top 10 law firm with 15 European offices as part of a global network of 45 offices in 20 countries and over 1500 lawyers, we have specialist teams in virtually every sector and geography that may be affected by a Brexit. Our Public Policy teams in Europe, and particularly in Brussels, alongside our colleagues in Washington DC, have decades of experience in advocating to advance your business objectives.